Patience and Perseverance can overcome resistance

How does one behave with a naughty child who resists everything? With patience. But then how will the child learn values like goodness, truth, honesty? Through perseverance.

Once a man planted a fern Plant and a Bamboo Plant. A week later both sprouted. A month later, the fern was 3 inches tall, the bamboo hardly grew. 3 Months later, the fern was a foot tall, still not much growth was seen in the bamboo. A year later the fern was almost 2 feet tall, the bamboo still did not show much growth. The man was frustrated with the bamboo and was about to uproot the plant, when he decided that since he had hardly anything to lose, why not allow the Bamboo plant a chance. Five years later, the fern was about 3 feet tall and lo! The Bamboo started growing by leaps and bounds! 5 feet 10 feet and 15 feet! The man was dumbfounded, but happy that he did not uproot the Bamboo earlier. For the first 5 years when the fern was growing slowly day by day, the Bamboo was strengthening its roots. Once its roots were firm enough, the Bamboo started growing fast and faster!

What worked in this case was patience, same is true for all investment types.

The Stock market hovered between 16000-19000 for most of the time between 2010 and 2013. Just when one thought that it would break down below 16000, it went up and when the market neared 19000 and one thought that a bull run had begun, it would climb down. Naughty and unpredictable like a child that belies all that the parents say about it! And just when everyone was frustrated that nothing was happening, it has now touched historic highs.

Have a look at inflation. All through 2010 till 2013, everyone from the Prime Minister, RBI Governor, Finance Minister, Advisor to PMO kept saying that inflation would moderate, but the damn thing just remained high. And now, as 2014 dawned, inflation has started to moderate.

What about interest rates? They track inflation and the RBI Governor is not in a hurry to reduce rates as long as inflation is not reasonable. However, look at G-sec yields-after peaking at 9% in 2011, they moderated to 7.8% levels till end of 2013 (Inspite of July 15th Mishap happening). Just when one thought that the losses of 15th July would get overcome, the yields climbed to 9% again by March 2014 end!

Gold prices, after touching historic highs and giving fantastic returns between 2009 and 2011, gave negative returns in 2012 and 2013, when everyone expected Gold prices to move higher!

Rupee-Dollar rate after massive depreciation-again unpredictable throughout 2013-has now stabilized at 60 levels, when everyone was putting levels of 70, 80, some even 100!

So, in each of the examples above, we saw that even Safe assets could suddenly become risky and vice versa. However, if one has patience and perseverance intact, one would always get returns equal to the long term returns generated by those assets. Gold has given long term returns of 9-10%, Bank FDs and Bonds, 8-9%, Real Estate 12-13%, Equity 17-18%.

That does not mean the asset will give the long term return year after year. At times it will exceed, at times underperform the long term return. Short term booms and busts are a part of the asset’s nature.

Remember, nurture the asset like a child and you will get good returns from the asset. The Bamboo plant takes more than 5 years to find its roots. After all, Patience and Perseverance can overcome resistance!